JPMorgan Chase & Co. oil analysts are currently unable to predict the future of the oil market, more than six months into the Iran war. This uncertainty stems from the fact that several economic thresholds, which the bank initially believed the U.S. administration would not cross, have already been breached. These include oil prices rising above $100 a barrel, gasoline prices nearing $5 a gallon, and surging treasury yields.
Analysts, including Natasha Kaneva, noted that the path to ending the war is increasingly unpredictable. The initial assumptions made by JPMorgan at the conflict's outset have been proven incorrect, leaving them without a clear exit strategy in view. This marks the first time since the start of the U.S.-Israeli war on Iran that JPMorgan has lacked a clear baseline view for oil markets.
Separately, oil prices saw a decline in early trade, extending previous losses. Brent crude futures dropped $1.24, or 1.2%, to $104.59 a barrel, while U.S. West Texas Intermediate futures were down $1.14, or 1.1%, at $101.29. Both contracts had already fallen approximately $3 on Wednesday. This recent drop is attributed to reports that Saudi Arabia is offering extra crude cargoes through Oman, which has eased fears of supply disruptions in the Middle East, despite Saudi Aramco reportedly seeking diesel supplies in the Mediterranean due to recent attacks on its facilities.
In related news, Goldman Sachs Group Inc. has shifted its trading recommendation from diesel to gasoline. Analysts, including Yulia Zhestkova Grigsby and Daan Struyven, explained that this pivot is due to refiners switching output from gasoline to diesel, which is rapidly tightening gasoline markets and is expected to lead to extended gains for the motor fuel. Gasoline prices were noted to be at $4.37 a gallon.
